Government ministers are continuing to use a luxury minicab firm owned by a major Tory donor that has instructed its drivers to break the law by driving in London's bus lanes.

Whitehall officials have confirmed that accounts held with Addison Lee will remain active despite transport chiefs in the capital branding the private hire company's campaign of disobedience "utterly irresponsible".

The firm, chaired by John Griffin, has donated £250,000 to the Conservative party and Griffin personally lobbied Philip Hammond, the former secretary of state for transport, to allow his cars in bus lanes.

As cycling groups warned the tactic could increse the risk of collisions, Transport for London reported on Tuesday that it had started catching some Addison Lee cars breaking the bus lane law. A spokesman for Addison Lee said the firm expected to receive "hundreds if not thousands of tickets by the end of the week".

Ministers and officials in the Treasury and Foreign Office as well as the departments for education, work and pensions and business use Addison Lee for official business. Children's minister Tim Loughton spent £3,610 on the private hire cars between May 2010 and the end of last year, while schools minister Lord Hill spent more than £2,000 over the same period, according to House of Commons records.

"It is completely unacceptable for ministers to be using a company that has said it is willing to break the law by instructing its drivers to use bus lanes, which puts the safety of other road users, especially cyclists, at risk," said shadow transport secretary Maria Eagle.

"Ministers must immediately explain why they still use this company who have shown a flagrant disregard for other road users in making this announcement."

A spokesman for the Cabinet Office confirmed the accounts remained in use, but said: "We expect all private hire vehicles in London to adhere to the prohibition on using bus lanes." A Treasury spokesman repeated the line, but said it had made no changes to the status of its account with the company. One Whitehall source indicated the government is concerned about Addison Lee's stance and departments are keeping its law breaking campaign under review.

Griffin wrote: "You are fully entitled to use the bus lanes" and promised to "indemnify all Addison Lee drivers from any fines or other liabilities that may result from using the bus lanes".

"The letter from the management of Addison Lee is utterly irresponsible," said Leon Daniels, managing director of Surface Transport. "By issuing it, Addison Lee risk regulatory action against themselves and leave their staff liable to criminal prosecution. We have asked Addison Lee to withdraw their letter immediately. We are also writing to all Addison Lee drivers reminding them that repeated breaches of traffic regulations could see their licence to operate withdrawn."

Mike Cavenett, spokesman for the London Cycling Campaign, said bus lanes are seen as a safe haven for cyclists and that heavier traffic flows are associated with more crashes.

In a separate move that further revealed Addison Lee's active lobbying operation at Westminster, the company released a list of 15 politicians from the three main parties who have met Griffin in the last 12 months. They included Eagle, Louise Ellman, the Labour chair of the commons transport select committee, and Caroline Pigeon, the Liberal Democrat chairwoman of the Greater London Authority transport committee.

Griffin also moved to deny any suggestion that his company was involved in tax avoidance. Minutes of his meeting with Hammond last October emerged on Monday showing the company's tax affairs were discussed, with Griffin pointing out that an arrangement which means most of the drivers are self-employed had been agreed by HM Revenue and Customs.

"The drivers who provide their services to Addison Lee are all self-employed and as a result are individually responsible for their own tax and National Insurance arrangements," Griffin said on Tuesday. "Addison Lee has no tax avoidance arrangements, nor does it have any kind of relationship with HMRC beyond that of any normal company. "Two separate companies work with the drivers to provide a service: Eventech Ltd owns all vehicle assets and the drivers hire, if they so chose, their vehicles from Eventech. Addison Lee PLC is a trading company that handles the provision of minicab services to customers and corporate clients and utilises the services of the drivers to carry out these assignments."